Law Review: Legal maneuvers in Ecuador costly to plaintiffs

For all the polished rhetoric and decorous argumentation by very pricey lawyers, there was no disguising the bare-knuckle nature of the hearing Dec. 17 before U.S. District Judge Jan DuBois in Philadelphia. On its face, the issue was whether Philadelphia lawyer Joseph Kohn would disclose his most private communications in a lawsuit, filed in Ecuador, against energy giant Chevron.

The suit alleges that Chevron bears responsibility for pollution in a wide swath of Amazon rain forest in eastern Ecuador, where Texaco, which merged with Chevron in 2001, had oil-drilling operations. But it was money, tens of billions of dollars of it potentially, that lay at the heart of the day's proceedings. For the plaintiffs' lawyers, who typically reap a third of payouts in civil litigation, that would be a very handsome payday indeed. But whether the plaintiffs - thousands of indigenous rain-forest people - ever will see any of that has now been called into question by the actions of their own lawyers.

The lawsuit might have been crippled - inadvertently, to be sure - by their lawyers' casting doubt on the credibility of the forum where the case is being heard. A little background is in order. Kohn and his Center City firm, Kohn Swift & Graf, which bankrolled the litigation beginning in 1993, bailed out of the case in the summer. Kohn decided to do this, his lawyers say, after he learned that members of his legal team in Ecuador had been caught on videotape laying plans for occupying the Ecuadorean courthouse where the lawsuit was being tried, and that they had met behind closed doors with a supposedly independent court-appointed expert, among other non-lawyerly tactics.

Since Kohn's withdrawal, a London hedge fund and the firms of Patton Boggs, a multinational law firm in Washington, and Motley Rice, a plaintiffs law firm that scored big in the tobacco litigation of the 1990s, have taken on the case. With billions potentially on the table, it must have seemed a reasonable bet. But given the unguarded commentary on the video, the new firms involved could face long odds on collecting. That's because the lawyers' at-times-outrageous videotaped commentary about the unreliability of the Ecuadoran judicial process and their candid admissions about using hardball tactics could make any U.S. judge skeptical of a verdict reached in Ecuador.

And since Chevron has no assets in Ecuador, the plaintiffs would have no choice but to seek enforcement of an Ecuadorean verdict in the United States. "There is no international law requirement that a court in one country has to enforce a judgment from a court in [another] country," said Duncan Hollis, associate dean for academic affairs at the Temple University Law School and a former State Department lawyer. "It is going to be very difficult for a judge to deal with" enforcing a judgment, Hollis said, "because the allegations are quite strong and might lead one to conclude that this case [in Ecuador] was not getting a full and fair hearing." The problem, as Hollis described it, is that U.S. judges recognize foreign judgments only if they emerge from countries that apply similar standards of justice. And Chevron is doing everything it can to make the legal climate in the United States inhospitable for the plaintiffs and their attorneys.

The video, outtakes from a documentary film made about the case called Crude, has proved to be a potent cudgel. Filing discovery motions before 15 federal judges around the United States, Chevron has obtained not only the outtakes but also hundreds of pages of private communications among plaintiffs' lawyers and their experts. It even managed to obtain the private journals of the plaintiffs' lead lawyer, Steven Donziger, in which he opines about the corrupt nature of the Ecuadoran judicial system. Donziger later explained that he had invited a documentary filmmaker to follow the team in Ecuador as part of a strategy to gain favorable attention for the case.

Well, that was hardly a winning strategy. After reviewing the outtakes, four federal judges have ruled that there was evidence that the plaintiffs' team had engaged in fraud. Those acts, the judges said, justified the highly unusual step of opening their privileged attorney-client communications to scrutiny by the Chevron team. There's an inkling of the obstacles the plaintiffs face in a Nov. 5 opinion by U.S. District Judge Lewis A. Kaplan, ruling in New York on one of Chevron's discovery motions. Kaplan is a tough judge. Several years ago, he scathingly dressed down Justice Department lawyers for threatening KPMG's accounting firm with indictment if the company persisted in trying to pay for the legal defense of its own executives.

His commentary on the Ecuadoran litigation is equally searing. Kaplan, after reviewing the outtakes, suggested that criminal charges brought by the Ecuadorean government against two Chevron executives had, in part, been orchestrated by the plaintiffs' team to further its lawsuit. He found evidence of possible fraud and misconduct by Donziger that "raise substantial questions as to his criminal liability and amenability to professional discipline."

He concluded that a report by a supposedly neutral, court-appointed expert establishing damages against Chevron had been written, in fact, by the plaintiffs and passed off as the independent expert's work. In one of the outtakes, Donziger jokes about the assassination of a judge, and Kaplan noted this. Judges can be prickly and sensitive to deference, or lack of it, shown by lawyers practicing before them. It doesn't take a wild leap of imagination to see how a remark like that, even if made jokingly, might sour a judge's view of the entire case.